Kinds of Investment

Other property which may be invested under the competent authority's approval (such as credit through reorganizations, mergers and acquisitions, procurement or stock splits).

Prohibited or Restricted Areas of Investment

Investment is forbidden in enterprises that may negatively affect national security, public order, good customs and practices, or national health, and those that are prohibited by law.

Investors who apply to invest in an industry in which investment is restricted by law or by an order given under the applicable law shall obtain approval thereof or consent thereto from the competent authority in charge of the industry in question.

In line with the previous two paragraphs, the Executive Yuan has adopted the "Negative List for Investment by Foreign Nationals."

Guarantee of Exchange Settlement

An investor may apply for exchange settlement against the interest accrued on his/her annual income, or against the profit surplus distributed to him/her from his/her investment.

An investor transferring his/her shares or withdrawing or decreasing his/her investment may apply for exchange settlement, in a lump sum, of the total amount of his/her investment as approved. The foregoing clause is also applicable to the capital gains realized from the investor's investment.

An investor's application for exchange settlement against the payment of principal and interest on his/ her loan investment shall be governed by the agreed terms and conditions.

Protection Against Expropriation

When foreign investment accounts for 45% or more of the total capital amount of an enterprise, the invested enterprise shall not be subject to requisition or expropriation for a period of 20 years after the commencement of business of the invested enterprise as long as the said capital contribution rate of the investor remains unchanged.

In case the government expropriates or acquires an invested enterprise for national defense reasons, a foreign investor whose investment is less than 45% of the total capital amount of the invested enterprise shall be entitled to a reasonable compensation.

Investment Incentives

The provisions of the Company Law requiring issuance of stock certificates to the public, and the provisions of the same law requiring setting aside a certain percentage of new shares (issued as a result of capital increase by cash) to be purchased by the employees of the invested enterprise do not apply to an investor's investment if such investment accounts for 45% or more of the total capital of the enterprise in which he/she invests.

Where an invested enterprise is organized as a company under the Company Law, an investor thereof who serves as a supervisor may be exempt from the restrictions on his/her domicile in Taiwan.

Protection of Rights

Except as otherwise provided for in other laws, an enterprise in which the investor has invested shall be accorded the same rights and obligations to which an enterprise operated by local nationals is entitled.

A Company and a Business Enterprise

Business Type Items

Company

Business Enterprise

Minimum capital requirement

No minimum requirement, but the capital still needs to be examined and certified by a local CPA and covers at least the incorporation cost (Note 1)

Not required.

Extent of shareholders/responsible person/partners' liability

Shareholders are liable to the extent of their capital contribution to the company.

The responsible person or partners of the business are liable for any liabilities arising from the business operation.

Business expansion

A registered company name is approved by the Ministry of Economic Affairs. This name is legally protected and its usage is nationwide. It is advantageous for business expansion.

A registered business name is approved by a local (county or city) government. The name protection and usage are limited.

Qualification of being a juristic person

A company is qualified as a juristic person.

Not qualified as a juristic person.

Requirement for accounting books and vouchers.

Must keep complete set of accounting books and accounting records to document its operating results.

Not compulsorily required. The profit and loss is reflected directly in income individually reported by the responsible person or partners.

Note 1: If the business entity engages in activities that require a special permit or approval, the authorities may set a higher capital requirement.

Comparison of a Subsidiary, a Branch Office and a Representative Office

Withholding tax of 20%; however, the 10% surtax paid by the company on its undistributed profits may be credited against the withholding tax.

None

Not applicable

Tax incentives under the Statute for Industrial Innovation

Applicable

Not applicable

Not applicable

Extent of the liability of a shareholder/head office

Shareholders are liable to the extent of their capital contribution to the company.

Foreign head office is liable for any liabilities unsettled by the branch.

Not applicable

Requirement for shareholder(s)/responsible person

Must have at least 1 corporate shareholder or 2 individual shareholders ( 1 or more individual or corporate shareholders in the case of a limited company ). All shareholders may be foreign nationals residing outside of Taiwan

Not required to have shareholders but required to register a responsible person

Not required

Requirement for director(s)

Must have at least 3 directors ( between 1 and 3 in the case of a limited company ). All directors can be foreign nationals residing outside of Taiwan.

Not required

Not required

Requirement for supervisor(s)

Must have at least 1 supervisor ( no requirement in the case of limited company ) who can be a foreign national residing outside of Taiwan.

Not required

Not required

Minimum capital requirement or minimum operating capital requirement

No minimum requirement, but the capital still needs to be examined and certified by a local CPA and covers at least the incorporation cost (Note 1)

No minimum requirement, but the capital still needs to be examined and certified by a local CPA and covers at least the incorporation cost (Note 1)

Not required

Sources of capital contribution

Capital contribution can be made in cash or thru capitalization of retained earnings or capital surplus.

Initial operating capital must be remitted in Taiwan from the offshore head office. Subsequent contribution of additional operating capital can be made through remittance from offshore head office or thru capitalization of the branch retained earnings.

Not applicable

Filing of annual income tax return

Required

Required

Not required

Withholding tax on salaries, rental income, professional fees, and other income payments.

Required

Required

Required

Allocation of administrative expenses by parent / head office

Subject to a 20% withholding tax. The deductibility of this allocation for tax reporting purposes will depend on the adequacy of the supporting documents thereon.

Normally not subject to 20% withholding tax and can be treated as a tax deductible item if certain criteria are met.

Not applicable

Keeping of accounting books and records

Required

Required

Required

Liquidation of the entity following completion of dissolution

Required

Required

Not Required

Purchase of real property and automobiles in the name of subsidiary / branch / representative

Permitted

Permitted

Not Permitted

Note 1. If the business entity engages in activities that require a special permit or approval, the authorities may set a higher capital requirement

Investing Procedures

Establishing a Company

Checking the Company Name

Investors should first select a Chinese name for the company that they will be setting up in Taiwan. The company that they set up must then file an application for pre-review of the company name and business scope as well as to retain the company name during the prereview period with the Central Region Office, MOEA.

Permission for Investment

An investor is required to submit the Investment Application Form and relevant documents to the Investment Commission, MOEA (address: 8F, No. 7, Sec. 1, Roosevelt Rd., Taipei; telephone: 023343-5700). If the invested company is located in an export processing zone or a science park, then the investor should apply directly to the administrative agency in charge of that zone or park.

Official Approval of the Invested Amount

After the investment is approved, the investor is required to take the letter of approval to a bank and apply for the inward remittance of funds, and then apply to the administrative agency in charge of permission for investment as mentioned in the previous paragraph to process the evaluation and approval of the invested amount.

Registration of the Company

If the company being established involves an investment of NTD 500 million or higher, the investor should apply to the Department of Commerce, MOEA, for the registration of his/her company. If less than NTD 500 million is involved, the investor should apply to the local municipality government or the Central Region Office, MOEA (for Taiwan Province), depending on location. If the company being set up is located in an export processing zone, a science park or a free trade zone, the investor should apply directly to the administrative agency in charge of that zone or park.

Taiwan has cancelled the minimum investment limit for company registration. Apart from some select industries, a company can be established as long as the investment is sufﬁcient to cover reasonable expected costs.

Business Registration

An investor must apply to the tax collection authority of the company's locality to register his/her business.

Export/Import Business Registration

The operator of an export/import business must apply first to the Bureau of Foreign Trade, MOEA, for an advance check of its English name, and then apply to that Bureau for registration as an export/import business.

Factory Registration

A company that is engaged in the manufacturing or processing of goods must apply for a factory registration with the local county or city government where it is situated. If the factory is located in an export processing zone, science park, or agricultural biotechnology park, the company should apply for registration with the administrative agency in charge of that zone or park.

Application for Businesses Requiring Special Permission

Before operating a business requiring special permission, and before the company is set up and registered, the investor is first required to obtain permission from the competent authorities to set up and equip the intended business.

After completing the establishment and registration of the company, the investor should obtain a permit from the competent authority for the intended business. Only then may the business go into operation as a specially permitted business.

Establishing a Business Enterprise

Checking the Business Enterprise Name

Investors should first select a Chinese name for the business enterprise that they will be setting up in Taiwan. The business enterprise that they set up must then file an application for pre-review of the business enterprise name and business scope as well as to retain the business enterprise name during the prereview period with the local county or city government to which the business enterprise being set up belongs.

Permission for Investment

An investor is required to submit the Investment Application Form and relevant documents to the Investment Commission, MOEA (address: 8F, No. 7, Sec. 1, Roosevelt Rd., Taipei; telephone: 023343-5700). If the invested company is located in an export processing zone or a science park, then the investor should apply directly to the administrative agency in charge of that zone or park.

Official Approval of the Invested Amount

After the investment is approved, the investor is required to take the letter of approval to a bank and apply for the inward remittance of funds, and then apply to the administrative agency in charge of permission for investment as mentioned in the previous paragraph to process the evaluation and approval of the invested amount.

Registration of the Business Enterprise

An investor setting up a business enterprise must apply for registration with the local county or city government.

Business Registration

An investor must apply to the tax collection authority of the company's locality to register his/her business.

Export/Import Business Registration

The operator of an export/import business must apply first to the Bureau of Foreign Trade, MOEA, for an advance check of its English name, and then apply to that Bureau for registration as an export/import business.

Application for Businesses Requiring Special Permission

Before operating a business requiring special permission, and before the company (business enterprise) is set up and registered, the investor is first required to obtain permission from the competent authorities to set up and equip the intended business.

After completing the establishment and registration of the business enterprise, the investor should obtain a permit from the competent authority for the intended business. Only then may the business go into operation as a specially permitted business.

Establishing a Branch Office

Checking the Company Name

The foreign investor should first apply to the Central Region Office, MOEA, for an advance check of the Chinese name of his/her company and its field of business, and for retention of that company name.

Apply for Investment Approval and Recognition of Foreign Company and Registration of Branch

He/she should then apply to the Central Region Office, MOEA, for "Recognition of Foreign Company," evaluation of investment amount, and registration as a "Branch of Foreign Company." If the site of investment is in an export processing zone, science park, agricultural biotechnology park or free trade zone, after receiving notice of recognition of foreign company from the Central Region Office, MOEA, the investor should apply for registration as a branch company with the administrative agency in charge of that zone or park.

Business Registration

An investor must apply to the tax collection authority of the company's locality to register his/her business.

Export/Import Business Registration

The operator of an export/import business must apply first to the Bureau of Foreign Trade, MOEA, for an advance check of its English name, and then apply to that Bureau for registration as an export/import business.

Factory Registration

A company that is engaged in the manufacturing or processing of goods must apply for a factory registration with the local county or city government where it is situated. If the factory is located in an export processing zone, science park, or agricultural biotechnology park, the company should apply for registration with the administrative agency in charge of that zone or park.

Application for Businesses Requiring Special Permission

Before operating a business requiring special permission, and before the company is set up and registered, the investor is first required to obtain permission from the competent authorities to set up and equip the intended business.

After completing the establishment and registration of the company, the investor should obtain a permit from the competent authority for the intended business. Only then may the business go into operation as a specially permitted business.

Establishing a Representative Office

Apply for reporting designated representative of a foreign company to handle legal matters in the Republic Of China ("R.O.C")

The foreign investor should first file an Application for Reporting Designated Representative for Handling Legal Matters in the ROC with the Central Region Office, MOEA, and obtain its letter of approval.

Apply for Tax Code

The investor should then apply to the local tax collection authority for a taxpayer code number.

One Stop Online Application

In keeping with the global trend and enhancing the competitiveness of business environment, the government has streamlined the cross-agency processes to provide convenient services to the public enable them to apply for incorporation and tax registration, Labor Insurance and National Health Insurance coverage, and register work rules via the “Company, Business and Partnership One-Stop Service Request” website.

The members of the public can use this one stop online application website to submit all the applications and check the status of their applications further throughout the data connection and processes integration between this website and relevant agencies without walk-in services. This facilitates the process of setting up companies and improves commerce industrial services efficiency.